BPNG, Commercial Banks Sign Landmark Master Repurchase Agreement
The Bank of Papua New Guinea (BPNG) has signed a master repurchase agreement with the country’s commercial banks in a move set to transform the operation of Papua New Guinea’s financial system.
The agreement establishes a framework allowing commercial banks to borrow and lend to one another — as well as with the Central Bank — on a collateralised basis. Interbank transactions can now be secured with Government inscribed stock, reducing counterparty risk, enhancing confidence between financial institutions, and supporting the development of a more active interbank market.

BPNG Governor Elizabeth Genia said commercial banks traditionally lent funds to each other outright, without any underlying collateral. “Collateralised repos and reverse repos remove counterparty risk and lay the foundation for a deeper and more liquid interbank market,” she said.
The agreement builds on the bilateral repurchase agreement introduced in 2019, which only applied to transactions between commercial banks and the Central Bank. “The new master repurchase agreement extends this to transactions directly between commercial banks, aligning PNG with international standards,” Genia said.
The governor said the next step will see these operations integrated into the Central Securities Depository system portal later this year, enabling online transactions. “By December 2025, BPNG aims to annex the agreement into the global master repurchase agreement (GMRA), fully aligning Papua New Guinea with global best practice,” she added.
Genia expressed gratitude to the BPNG team, the International Monetary Fund technical assistance team, and the commercial banks for delivering the reform. “The agreement, signed with all our commercial banks, strengthens the foundation of our banking system and will support the stability and resilience of Papua New Guinea’s financial system for many years to come,” she said.

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According to Maru, the firm is keen to secure gas supplies from PNG in partnership with KPHL and join as an equity partner in a new gas project. Plans also include setting up a steel plant within the Caution Bay Special Economic Zone (SEZ), near the PNG LNG project site operated by KPHL.

KPHL has already begun work on a steel fabrication facility in the zone, which was granted an SEZ licence earlier this week. The government has pledged full support for domestic steel production to boost PNG’s manufacturing capacity.

Lloyds Metals will attend the PNG Special Economic Zones Summit in Port Moresby from August 31 to September 3, alongside other Indian investors and officials, to explore opportunities and meet potential partners.

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According to Tisa’s financial report, the group made a profit of about K62.2 million in 2024, with its overall balance sheet showing K990 million in strength. Its income for the year grew by K42 million.

Group CEO Michael Koisen noted that the retail savings and loans portfolio performed successfully, despite challenges including an earthquake in Vanuatu and the January riots in PNG, both of which impacted their insurance division.

Koisen also said the group is heavily investing in growing its bank, which would remain a major focus for the next few years. He clarified that the shift in focus from the society to the bank would ultimately be decided by the members.

He emphasized that Tisa remains a member-driven organization. “If members want to keep the SNL, we will keep it,” he said.

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The aircraft are also capable of operating international flights and may serve new routes currently under evaluation. All A220s will be equipped with Business and Economy class seating and offer complimentary WiFi for passengers to stay connected during their journeys.

Air Niugini confirmed that its engineers, pilots, and cabin crew have begun extensive training to prepare for the aircraft’s entry into service. The airline aims to launch the new fleet during the first week of September, marking a milestone in its modernisation program.

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Mr. Stone emphasized that the deal showcases OTML’s drive to harness PNG’s mineral potential and leverage state support for long-term sectoral development.

He added that the company anticipates its expertise will boost the Misima project’s success and contribute to Papua New Guinea’s Vision 2050 goals of wealth creation and people empowerment.

The Misima mine, once operated by Placer Dome Incorporated between 1989 and 2004, produced about 3.7 million ounces of gold during its 15 years of operation.

OTML highlighted that the acquisition not only expands its asset portfolio but also aligns with its vision of sustainable national growth.

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“This move gives our customers the financial capability to bring their plans to life,” Dayal said. “We want to support Papua New Guineans by making banking more accessible and responsive to their needs.”

According to Dayal, the revamped loan offering includes simplified application processes, quicker approvals, and reduced requirements. “We’ve removed several barriers—no employment confirmation letter is needed for existing customers, and even new customers can apply with just one salary credit,” he explained.

Additionally, BSP now permits external loan refinancing under the new terms, further expanding options for individuals looking to consolidate or restructure existing debt.

The enhanced loan facility reflects BSP’s commitment to customer-centric banking solutions that support everyday financial milestones and aspirations.

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He added that the bank’s core strengths—sound fundamentals and disciplined execution—have enabled it to deliver value and stability to its shareholders. “A strong capital position remains central to our strategy,” Robinson noted.

According to BSP, overall income growth in 2024 stood at 8.4 per cent. This was largely driven by a K120 million increase in net interest income and a K103 million rise in foreign exchange earnings. Fee income also increased by K33 million, while income from insurance and other sources declined by K25 million due to weaker returns from operations in Fiji.

The bank also noted that part of the profit growth—an additional 17 per cent—was the result of several one-off factors. These included a K95 million settlement related to additional company income tax and a reduction of K120 million in general provisions following an updated economic outlook post-COVID-19. BSP is also preparing for its exit from finance operations in Cambodia and Laos.

Investment in digital and operational modernisation was another highlight of the year. The bank allocated K345 million towards enhancing its systems and services, which contributed to an 8 per cent growth in revenue, driven by higher foreign exchange activity and transaction volumes.

However, the bank’s operating costs rose by 22 per cent, reflecting increased spending on technology upgrades and specialist staffing. As a result, the underlying profit still rose by 10 per cent to K979 million, although the Group’s cost-to-income ratio also increased.

BSP closed the year with a strong balance sheet, reporting a 0.5 per cent rise in total assets to K37.1 billion. Gross loans grew by 0.6 per cent, further supporting its asset growth.

In line with its corporate social responsibility initiatives, BSP invested over K17 million in community development projects, sponsorships, and donations throughout the regions in which it operates.

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"The new design evokes symbols that are unfamiliar and controversial, such as the Moloch Sigil and Khasar Tamg," Governor Undialu said. "This change distances the bank from its deeply rooted cultural representation, especially at a time when it is expanding internationally."

The Governor emphasized that while BSP's growth in international markets is commendable, it must not come at the cost of abandoning the visual identity that connects the institution with its PNG and Pacific roots. He further proposed that the matter be addressed formally at the bank’s next Annual General Meeting (AGM) through a Shareholders Resolution.

In response, BSP Group Chief Executive Officer Mark Robinson acknowledged that altering the decades-old logo would be met with mixed reactions. He explained that the new brand identity was shaped through input from both employees and customers, with the aim of creating a more modern and inclusive image.

“We understand the emotional connection people have with the original logo,” said Mr. Robinson. “The rebranding was intended to reflect our values and commitment to the communities we serve, not to alienate them.”

Highlighting the bank’s presence in seven Pacific markets, Robinson said the updated brand features distinct cultural patterns designed by local artists from each country. These designs incorporate five shared themes — growth, aspiration, care, prosperity, and journey — to reflect the broader Pacific identity and BSP’s evolving story.

Mr. Robinson concluded by noting that while change can be difficult, the bank hopes the new visual identity will gain wider acceptance over time. “This rebranding marks a new chapter in our journey, one that respects our heritage while looking ahead to future opportunities.”
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The statement that Bank South Pacific (BSP) Finance Group is not majority-owned by Papua New Guinea underscores a critical shift in ownership and control of one of the nation’s most essential financial institutions. This development has far-reaching consequences, raising concerns about national sovereignty, economic independence, and the long-term welfare of Papua New Guineans who depend on BSP for their banking needs. The loss of majority ownership reflects not just a financial transaction but a broader issue of governance, particularly in light of governmental decisions that have prioritized short-term financial gains over national economic stability.

Historically, BSP originated as the PNG Banking Corporation, a homegrown institution designed to serve the people of Papua New Guinea. It was once a symbol of national pride and economic self-sufficiency. However, through successive waves of privatization and restructuring, its ownership gradually shifted away from government and local hands. The decline in Papua New Guinea’s stake in BSP is a consequence of fiscal mismanagement and short-term decision-making by various administrations, leading to a gradual erosion of national control over this crucial financial entity.

One of the primary factors that contributed to BSP’s current ownership structure is the persistent desire of politicians for immediate cash inflows. Faced with economic challenges and budgetary shortfalls, successive governments sold off significant portions of their shares in the bank as a quick-fix solution. Unfortunately, these decisions were made with little regard for the long-term ramifications on the country’s economic sovereignty, effectively handing over control to external interests.

Further compounding this issue is the continuous reliance on borrowing by financially struggling PNG governments. Instead of tackling systemic problems such as corruption and inefficient public expenditure, government leaders have repeatedly opted to sell off valuable national assets like BSP shares to cover immediate financial gaps. This pattern of behavior has not only deprived future generations of potential economic benefits but has also ceded strategic influence over the country’s banking sector to foreign stakeholders.

As a result of these ownership changes, BSP now operates with minimal accountability to local stakeholders. With no majority Papua New Guinean ownership, the bank has greater freedom to implement fee structures and banking policies that may not necessarily align with the best interests of the local population. Higher banking costs and increased service charges are direct consequences of this shift, placing undue financial pressure on individuals and businesses that already struggle under challenging economic conditions.

The shift in ownership also means that BSP’s decision-making priorities may no longer align with the developmental needs of Papua New Guinea. In the past, BSP played a vital role in funding local projects and supporting economic growth initiatives. However, with foreign ownership influencing strategic direction, there is a growing risk that profitability will take precedence over national development, sidelining essential services and projects that benefit local communities.

Another potential danger of BSP’s foreign-dominated ownership is the risk of corporate relocation. If foreign investors decide that Papua New Guinea is no longer a viable or profitable market, they could opt to move operations elsewhere. This would leave thousands of employees jobless and disrupt banking services nationwide. The implications of such a scenario are severe, reinforcing the necessity of retaining majority local ownership in critical financial institutions.

Additionally, the lack of national control over BSP leaves open the possibility of rebranding and restructuring that could erase the bank’s historical and cultural connection to Papua New Guinea. If the bank undergoes a significant rebranding effort, it could symbolize a complete severance from its origins as a locally established institution, further diminishing the role of Papua New Guineans in its operations and decision-making.

When policy decisions made by BSP come under scrutiny, Papua New Guineans may find themselves in a weakened position when voicing concerns. Ownership is synonymous with influence, and with the loss of majority ownership, the power to advocate for favorable banking policies is greatly diminished. In this sense, the public has been left with little recourse, as control over banking policies has shifted away from national authorities.

The decline of local ownership in BSP serves as a cautionary tale of governance failures and the dangers of prioritizing immediate financial relief over long-term national stability. The reckless sale of state-owned assets for short-term financial gains has led to a situation where an institution meant to serve the people is now largely controlled by external entities. This not only threatens economic stability but also weakens national sovereignty.

In light of this, there is an urgent need for greater transparency and accountability in the management of national resources. Policymakers must recognize the long-term consequences of their actions and work towards regaining control over key sectors of the economy. Ensuring that strategic financial institutions remain in the hands of Papua New Guineans is crucial for safeguarding the country’s economic future.

In light of this, there is an urgent need for greater transparency and accountability in the management of national resources. Policymakers must recognize the long-term consequences of their actions and work towards regaining control over key sectors of the economy. Ensuring that strategic financial institutions remain in the hands of Papua New Guineans is crucial for safeguarding the country’s economic future.

Ultimately, the loss of majority ownership in BSP is a stark reminder of what can happen when short-term political and financial interests override the broader needs of the nation. To avoid similar outcomes in the future, Papua New Guinea must adopt a more responsible and strategic approach to managing its national assets. Rebuilding local control over financial institutions should be a priority, ensuring that they serve the needs of the people rather than the interests of foreign investors. It’s time to join our local banks, like TISA Bank, Mama Bank, Agriculture Bank, and Kina Bank.

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During a meeting held yesterday with Minister Duma, Air Niugini CEO Gary Seddon, Kumul Consolidated Holdings Limited (KCHL) Managing Director Prof David Kavanamur, and executives from State-owned Enterprises, the airline presented its ambitious K5 billion transformation strategy. According to Seddon, Air Niugini is embarking on its largest capital investment phase, with plans to introduce 13 new aircraft between 2025 and 2028. The first of these, three Airbus A220s, are scheduled to arrive in September.

Prime Minister Marape described the acquisition as a “significant milestone,” underscoring the government’s commitment to bolstering key national assets and enhancing connectivity for the people of Papua New Guinea. He emphasized that the new fleet would not only improve service reliability but also stimulate tourism and foster trade opportunities within the country and beyond.

“This investment in Air Niugini is an investment in our future,” Marape stated. “We are ensuring that our national carrier remains competitive and continues to serve our nation effectively.”

He added that the modernized fleet would greatly enhance connectivity and service delivery across Papua New Guinea. To support this initiative, the government pledged to upgrade airport infrastructure and expand pilot training programs, thereby securing the long-term sustainability of Air Niugini.

The Prime Minister reiterated the government’s full backing for the project, highlighting its potential to transform the aviation landscape and contribute to the economic growth of Papua New Guinea.

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